Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Reuters in an article — by Uday Sampath and Yuvraj Malik, “Disney snubs Peltz’s board bid, taps Nike’s Parker as new chair” — regarding activist investor Nelson Peltz challenging Walt Disney’s board of directors over “succession planning, poor cost controls, and unprofitable streaming business.”
Can Disney revive its lost magic?
Nelson Peltz’s activist fight against Disney’s board of directors and CEO Bob Iger should be an indirect positive for Disney stock regardless of whether or not Peltz directly achieves his aims. Peltz, an activist investor and founding partner of Trian Fund Management, has probably found a target ripe for a turnaround with the pricing power and fan base to weather a possible recession. The stock could rise if fresh, effective, and efficient business changes are implemented and a solid successor to Bob Iger is found that can instill confidence amongst Wall Street analysts. Additionally, the money losing Disney+ streaming service (which we spoke about last year) needs to be effectively handled; at some point, profits should come into focus.
Disney’s stock is down more than 50% from its 2021 pandemic highs, and in December was at levels seen in 2014. To many, Disney’s stock seems to have solid potential at these prices, and now that has been affirmed with Disney’s revelation that Trian Fund Management, LP has suggestions for management to implement and revive that lost Disney magic!
It’s no coincidence that on the same day Disney discussed a potential fight with Peltz, they also announced a laundry list of changes to cheer customers vexed by exorbitant prices, including theme-park changes, free digital photos, a larger supply of low priced tickets, more value from their Magic Key program, and increased flexibility to hop between parks.
Quoted article excerpts are below:
“For shareholders, regardless of whether or not Peltz wins his battle, his move seems to have made Disney’s management more aggressive in implementing improvements and fine tuning their strategy,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“I’m grabbing a box of popcorn to watch this show!” Schulman said.
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-05